Sony Corporation has announced significant new measures to address reform of its PC and TV businesses aimed at accelerating the revitalization and growth of its electronics business.
The company identified PCs and TVs as businesses for which profitability improvement would be a key priority and implemented various reform measures. Sony says reforms executed within the TV business have significantly enhanced its operational structure and product competitiveness. However, it now anticipates its target of returning the TV and PC businesses to profitability will not be achieved within the fiscal year ending March 31, 2014.
As a result of these latest results Sony is taking further steps to divest interests on PC and TV businesses, while at the same time moving forward with further optimization and streamlining of its manufacturing, sales and headquarters/indirect functions.
Sony and Japan Industrial Partners Inc. ("JIP") today concluded a memorandum of understanding confirming the parties' intent for Sony to sell to JIP Sony's PC business currently operated under the VAIO brand.
Sony has decided to concentrate its mobile product lineup on smartphones and tablets and transferring its PC business to a new company established by JIP. Sony and JIP will now proceed with due diligence and negotiate detailed terms and conditions of the business transfer, targeting the conclusion of a definitive agreement by the end of March 2014.
Following reevaluation of the product lineup, the new company is expected initially to concentrate on sales of consumer and corporate PCs in the Japanese market and seek to optimize its sales channels and scale of operations, while evaluating possible further geographic expansion.
Sony has also been engaged in various cost reduction initiatives for the TV business, based on a plan announced in November 2011. These initiatives include enhancing LCD panel-related cost efficiency and rationalizing R&D expenses, while also strengthening product competitiveness and operational efficiency in order to improve marginal profit ratio. Due to these measures, losses from the TV business, which amounted to 147.5 billion yen in the fiscal year ended March 31, 2012, were successfully reduced to 69.6 billion yen in FY12, and are now anticipated to be reduced further, to approximately 25 billion yen in FY13.
While Sony now anticipates that its target of returning the TV business to profitability will not be achieved within the fiscal year ending March 31, 2014, largely due to unexpected factors such as the slowdown in emerging markets and declining currency rates, the reforms executed within the TV business over the past two years are putting the business on a path to turnaround.
Sony will shift its product mix and focus on increasing the proportion of sales from high-end models, with plans to reinforce the company's leading position in the 4K market by strengthening its product lineup while also bolstering its 2K models with wide color range and image-enhancing technologies. In emerging markets, Sony will aim to harness market expansion by developing and launching models tailored to specific local needs.
The company has decided to split out the TV business and operate it as a wholly-owned subsidiary. The targeted timeframe for this transition is July 2014.
Due to the implementation of the above measures across Sony's TV and PC businesses, and its manufacturing, sales and headquarters/indirect functions, Sony is anticipating headcount reduction of approximately 5,000 (1,500 in Japan, 3,500 overseas) by the end of March 2014.